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The Problem: Private inspection service was used.
The Key Point: Good faith dealing is required.
The Solution: Promptly inform the buyer you are expecting a government inspection.
QUESTION
We are a shipper-distributor out of Florida. Earlier this week we sold a load of bell peppers to a wholesaler in Montreal. When the product arrived, the receiver complained about the condition of the product and told us they were calling for an inspection.
We thought they were calling for a government (Canadian Food Inspection Agency) inspection, but later that day we received an inspection from a private firm showing 30 percent condition defects. We agreed to let them handle the product on a price-after-sale basis, and we’re still waiting on the returns, but in the event we cannot agree on a price—would an inspection from a private firm hold up in a formal proceeding?
ANSWER
Although we do not recommend using a private inspection service without the agreement of all interested parties, especially in areas like Montreal where government inspections are typically available, you should not assume that a private inspection certificate will not be given weight in a formal proceeding where price-after-sale returns are disputed. We think good faith requires you to promptly inform the buyer that you are expecting a government inspection of the product if you are going to later challenge the validity of the private inspection.
It’s worth remembering that “good faith” is not just an idealistic notation of how things should be. Good faith is required by the Uniform Commercial
Code (UCC) which is heavily relied upon in formal decisions issued by PACA, the DRC, and Blue Book Services. Specifically, UCC § 1-304 provides “Every contract or duty within [the UCC] imposes an obligation of good faith in its performance and enforcement.”
Your questions? Yes, send them in. Legal answers? No, industry knowledgeable answers.
If you have questions or would like further information, email tradingassist@bluebookservices.com.
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